3 Income Stocks: Up to 13% Yields (Simple Strategies)
- Investors seeking high-yield opportunities without needing substantial capital can explore business development companies (BDCs).
- (TCPC) focuses on lending to middle-market companies valued between $100 million and $1.5 billion.
- despite its connection to BlackRock, TCPC has faced challenges, including a dividend cut.
Unlock high-yield income with up to 13% yields from business progress companies (BDCs)! These stocks,often trading under $10,offer a compelling way to invest like private equity pros,providing access to the typically exclusive world of small business lending. discover three top BDC picks,including BlackRock TCP Capital Corp,Crescent Capital BDC,and PennantPark Floating Rate Capital,exploring their unique strategies and yields. Learn how to navigate the landscape of high-yield investments with insights from News Directory 3. What are the essential factors to consider before investing? Find out what’s next.
High-Yield BDCs: Private Equity-Style Investing for Under $10
Updated June 13, 2025
Investors seeking high-yield opportunities without needing substantial capital can explore business development companies (BDCs). Created by Congress to support small business lending, these publicly traded firms function similarly to REITs, distributing at least 90% of their taxable income as dividends.This allows everyday investors to tap into private equity-style returns, with some stocks starting at under $10 and yielding nearly 13%.
Here are three BDCs to consider:
BlackRock TCP Capital corp (TCPC)
BlackRock TCP Capital Corp. (TCPC) focuses on lending to middle-market companies valued between $100 million and $1.5 billion. Its diverse portfolio includes 146 companies across various sectors. A meaningful portion (83%) of its investments is in first-lien debt, with another 7% in second-lien debt and 10% in equity.Managed by a BlackRock subsidiary, TCPC benefits from the firm’s extensive resources. The BDC’s portfolio is heavily weighted in floating rate debt.
despite its connection to BlackRock, TCPC has faced challenges, including a dividend cut. While the stock trades at a 13% discount to its net asset value (NAV) and yields around 13%, it grapples with elevated non-accruals, representing 12.6% of the portfolio at cost and 4.4% at fair value.
Crescent Capital BDC (CCAP)
Crescent Capital BDC (CCAP) is affiliated with Crescent Capital Group, specializing in below-investment-grade credit strategies. CCAP invests in 191 portfolio companies,primarily in the U.S. middle market, with some exposure to Europe and Australia. Similar to TCPC, it focuses on first-lien debt (91%), with moast of it being floating-rate (97%).
CCAP’s dividend history is complex, involving special dividends and supplemental payments. While the base dividend remains at 42 cents per share, variable supplemental dividends have been discontinued. Concerns about rate compression and increasing credit issues have led to a 23% discount to NAV,potentially attracting bargain hunters despite the risks. The BDC’s dividend yield is around 11.5%.
pennantpark Floating Rate Capital (PFLT)
PennantPark Floating Rate Capital (PFLT) targets profitable, growing, and cash-flowing midsized companies, especially those with $10 million to $50 million in annual EBITDA. Its portfolio includes 190 companies supported by approximately 110 private equity sponsors. PFLT focuses on healthcare, software and technology, consumer, business services, and government services.
As its name suggests, PFLT primarily deals in floating-rate first-lien debt, comprising about 90% of its portfolio. The remaining 10% is split between equity co-investments and joint venture equity. The company has been transparent about the impact of declining interest rates on its financials.
PFLT trades at a 6% discount to NAV and offers a monthly dividend with a yield of nearly 12%. Though, dividend coverage is tight, with a 97% net interest income (NII) payout ratio in fiscal 2024.The company’s future performance is closely tied to the Federal Reserve’s interest rate decisions.
What’s next
Investors should carefully consider the risks and complexities associated with each BDC, including non-accruals, dividend sustainability, and interest rate sensitivity, before making investment decisions. Monitoring Federal Reserve policy will be crucial for assessing the outlook for these business development companies.